EurO tO CoMe UndeR PresSurE – SelL GoLD - Apr 19

Since last week, news from Europe and Spain continues to dominate the world financial market. This week we saw successful biding of Spain’s short term bond, but today’s 10-year auction would further indicate investor’s confidence level in Spanish economy.

Spain’s latest doubtful bank loan figures added more to country’s economic gloom, since February’s number suggest that the ratio of bad loans jumped to 18-years high to Euro 143.8 billion to 8.15 pct of the total credit versus from 7.91 pct in January.

I am not sure how many of you took note of my yesterday’s post, I had highlighted that UK’s MPC meeting minutes could be the main driver behind Pound Sterling’s move, which roar passed the 1.60 figure.

Helped by better employment data, Pound got further boost when dovish Adam Posen did not demand for an increase in the size of QE, which is currently GBP 325 billion.

Today’s US Economic data could give last push to Euro to slide below 1.30 levels, as market should be nervous after French Socialist challenger Hollande’s statement that he will protect sovereignty and re-negotiate German led fiscal pact. Survey suggests that the Socialist challenger is constantly leading by over 7 pct. Spain’s 10-year bond auction will be today’s trend setter. One thing is for sure that there is plenty in Europe to worry about.

Gold @ $ 1641 = Selling strategy to continue around $ 1642-44, as Gold should stay below $ 1649 for $ 1633-35 levels as my new target is $ 1626. However, only break of $ 1652 could delay the down move

Euro @= 1.3122= Sell Euro around 1.3135-40, a break of 1.3080 is required for a test of 1.3040. A break of this level would pave way for 1.2950. However, only break above 1.3180 could risk for minor gain.

GBP @ = 1.6032= There is a minor risk that break of 1.6045 could push Cable towards 1.6070. However, once 1.5975 surrenders Pound would ease and should test 1.5840.

Vinod, auction is successful, but not cure to the European problem, which is trillions. will $ 5 bilion succesful make big impact? They have managed to clear one small hurdle. Basically trading is based on such information. Such up moves provides good opportuinity, sometimes it hapen that we get caught wrong footed...Cheers